Ron Paul and Economic Theories (and other backwards thinking)

(This following post grew out of some questions and comments on a comment thread at APea's invaluable Twelfth Bough blog)

Many moons ago scientists thought the heavens revolved around the earth. They had fashioned theories and equations to verify this. But every now and then a planet would be observed moving backwards. How was this possible?

Explanations were put forward and some involved very complicated maths to 'prove' how this was possible. Of course, only educated/trained and intelligent people could follow these explanations. So the average person of average intelligence and average education had no way of credibly arguing with these 'scientists'.
But a critical foundation that these complex calculations were based on was wrong.

There was one crucial piece of information, one crucial assumption that was backwards. And that was that the heavens, including the planets, revolved around the earth. They did not, of course. Now with this piece of missing information, the average person today can see that all these complex calculations and theories and all the disputations that occurred between the scientists were meaningless nonsense. So it is with economists and their theories today. And similarly, we don't need to understand the complexities of their false arguments to understand how they are simply wrong.

There is a fundamental equation in economics and understanding it is crucial to seeing the nonsense that is peddled as economic management today. It is simple and well known to economists yet seemingly few economists have any idea of the truth and therefore the power that rests in this simple equation. It is the economic equivalent of Einstein's E=MC2.

It is this. P=MV

P= production i.e. GDP (Gross Domestic Product) or the total value (denoted in dollars) of the wealth created by people in a country in a given year.

M= the size of the Money Supply (M3) we all have to buy that wealth that was created (GDP). (M3 is the amount of notes and coins [M1] together with the total credit balances in all the bank a/cs in the land [M2] plus some Bills of Exchange and a couple of other things I don't understand!)

V= the velocity of the Money Supply i.e. how fast people spend the money they get. In boom times the money supply (M) will turnover 1.1 times overall in a given year. In depressed times it will turn over 0.9 times. SO for our purposes we can say it turns over on average of 1.0 times which also means we can leave it out of our calculations without affecting the outcome.

So simplifying this down, Production and therefore employment) will rise (or shrink) to the level of Money (M) available to purchase said production.

So increasing Money Supply leads to increasing prosperity until the productive capacity of a nation is totally employed. Then if M is increased further the prices of Production and not the amount of P will increase to match the level of Money. i.e. we now have price inflation.

This is what happened in Weimar Republic in Germany in the 1920's. The private banks printed massive amounts of money (while blaming the government for it ever since) and lent it into the economy and massively inflating the price of any goods on sale. The purpose was to collapse the economy, destroy people's savings and buy up assets with foreign currency at fire sale prices. It worked.

On the other side of the Atlantic a few years later in the 1930's, the bankers reduced M (the Money Supply) to one third of its level of the 1920's and created the Great Depression with its price deflation. It also wrecked the economy and caused massive hardship.

So controlling the level of money (regardless of whether it is gold backed or not) is what determines a sound economy. Too much and you have inflation; too little and you have depression and deflation. Having too much and keeping it out of the productive economy and channelling it into speculation, as at present, will result in both inflation and depression at the same time.

It is a very simple and very understandable mechanism. Hence the mountain of economic jargon and nonsense to hide this simple truth that regulating the amount of money in the economy to make full use of the labour and resources available will result in a stable and prosperous nation. This is the last thing the banks want as it is nowhere near as profitable for them. Besides, what's the point (for them) of being rich if every one else is rich, too?

If the government also creates this money itself and therefore pays no interest to any outside banks, then the nation will have no national debt either. Imagine that; a government that had no debt and could never say it had no money to fund whatever projects there were people and resources available for!

This was the situation in the prosperous American Colonies-


“When Benjamin Franklin was called before the British Parliament in 1757 and asked to account for the prosperity in the American colonies. He replied, "That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one." It was the struggle for financial sovereignty that precipitated the American Revolution when the (Rothschild) Bank of England forced the colonists to give up their own currency.
That war never ended.”


The above quote is from an excellent and wide ranging article by Nikki Alexander from the invaluable Information Clearing House.
Reforming the Global Financial System-
Flushing the Parasites

This article has a list of further links to excellent writers on this subject.

For further reading on how money is created, see my article of a couple of years ago-
Warring World Part 4b Introduction to "The System" (cont)

What every country needs is for its representative government to be the sole issuer of ALL monies with banks unable to create credit through checking a/cs and credit cards. They would be reduced to lending money from their own reserves just as building societies do now. They would become the financial intermediaries they have claimed to be all along.

Prosperous conditions can be easily achieved by matching the amount of money issued (at low or no interest) with the productive capacity of the population. This ensures full employment with no inflation. It's exceedingly simple.

The govt can issue money by either spending it into the community (to pay for social security or infrastructure projects at no cost to anyone) or lending it into the community through low interest loans (the interest from which would be income for the government)
The end result from this simple move would be a peaceful and prosperous country with little to no taxation.

A currency is given worth by the people who do the producing. So a country's Money supply is backed by the country's GDP (the total value of a country's Production of goods and services in a given year). That is always the underlying reality whether or not you can exchange a dollar for a speck of gold or not. The point of having gold as the so called backer of the currency is to give control over that same currency to those who own the gold and we are back to square one with the "boom and bust business cycle" and its attendant instability.

In a society with a gold backed currency, the owners of the gold will limit how much money we can have and so also limit the wealth we can create for ourselves and keep us forever dependent on them.

After the Spanish started stealing gold from South America centuries ago, they experienced a booming domestic economy. It was simply because the extra gold was converted into extra money which allowed extra production to be produced and traded.

They could have experienced exactly the same thing by having a properly managed fiat currency. Fiat currencies are not backed by hot air as many would have us believe. They, like ALL currencies, are backed, in fact, by the amount of goods that can be bought with them - the country's GDP which is the productivity of the people. That we have inflation and deflation to adjust the price of goods and services to match over time the amount of the Money Supply is ample proof of the fact that a currency is backed by the nations GDP regardless of what it is said to be backed by.

That is why the money supply belongs to the people as a whole and it is a theft of grand proportions on the part of bankers to have dispossessed us of it.

Ron Paul with his 'gold backed currency' is playing directly into the hands of the bankers he says he is against. He should be avoided for that very reason regardless of what anybody thinks of his motivation and whatever else he might say.

If you can exchange your digital or paper currency for gold, it is still not much use to you if you can't exchange the gold for goods for whatever reason. So the gold, too, is given its value by the goods that are exchanged for it. This applies to every medium of exchange. That's is why you have it; to exchange it for goods and therefore it is the goods that give it its value. Goods that are created by productive people and who are willing to accept your gold for it.

Gold is attractive only because currencies are kept unstable by private bankers who have no interest in having a stable money supply. It is worth bearing in mind that these same bankers also control all commodity markets including the gold market and regularly run it up and down to suit their own purposes which always amount to taking wealth out of your pocket and putting it into theirs without providing anything of value in exchange. This is also known as stealing!

Ron Paul is currently popularising the idea of a gold backed currency together with a form of Laissez-faire economics i.e. little to no government planning. His chief intellectual source for all this is the Austrian School of Economics which was formed around economist Frederich Hayek's writings on economics and politics.

Hayek's book, "Road To Serfdom" is a compelling argument against big government. It describes the weakness of human beings in the face of wielding power over others and the corruption this brings to the human mind. No argument there from me, at all.

The flaw in Hayek's thinking, though, is that ejecting the govt and leaving the economy to a laissez- faire system is getting rid of the problem. It doesn't. The problem is the bankers that wield power over the government and not the government itself. The bankers have power over the markets as well. Because they literally own the market places (the NYSE, for instance) and the clearing houses, they can do what they like with the markets through the simple but fraudulent practice of short selling; selling what they do not own into a market and driving the price down. The gold market is far larger than all the gold mined in history.

The bankers are free to control commodity markets and the lending market, otherwise known as the Money Supply, whether under a so called government planned and controlled market or a laissez-faire one. Either way they are free to make the money supply and to vary the size of the money supply at will under whatever political and economic philosophy is in fashion. The effect of periodically shrinking the Money Supply is what causes the otherwise mysterious “Business Cycle” of boom and bust.

It is this mismatch of money supply quantity and the quantity of resources of a community or nation that is THE fundamental problem. Laissez- faire economics does NOTHING to alleviate this primary problem.

Regarding “hard currencies”: having productive resources such as physical labour, intellectual skills, raw materials, machinery and productive land all sitting around idle because the nation does not own enough gold to allow it to print enough money to facilitate the use of all these idle resources while people are without housing and food is just plain nuts! Worse, it is criminal. It is the kind of insanity that is the hallmark of evil.

This is exactly what happened in Australia during the Great Depression. The Bank of England withdrew the gold it had lent to the Australian government so the government had to shrink the money supply to match the amount of remaining gold it had. Massive human cost ensued. The bankers would do it again in a flash, I'm sure.

The Austrian School's explanation of the mysterious 'business cycle' comes closest, in my view, of all the economic 'schools' to the truth of the cause of this mysterious cycle of boom and bust. But it puts the blame for the varying size of the money supply at the feet of interest rates as if bankers' behaviour was completely determined by the interest rate of the day and not their own rapaciousness. The blame lies squarely with the bankers and their lending policy i.e. how much they are willing to lend regardless of what the interest rate is. It should be obvious but it apparently isn't. Amazing for such great intellects. No?!

So Ron Paul and the Austrian School of Economics would leave us to the predations of the bankers without any control over them.

Pitting the Austrians against the Keynesians is a classic Hegelian Dialectic ploy. I liken it to a game of tennis where the 'opponents' are actually co-operating in putting on a show and captivating the spectators attention when, as in this case, we should be looking outside the court. Perhaps at Douglas' Social Credit, for instance. But more on Keynes and Douglas in a moment.

I mentioned the equation P=MV earlier. The meaning and it's working appear simple and straight forward and they are. It is usually taught in first year economics. But what is not taught is that the banks manufacture M, the money, and that they increase and decrease the level of this money at will and so assume near total control of the economy (Production) as a result; increasing it and decreasing it as they please through their lending policies. This is the primary cause of the “business cycle”.

P=MV. If the Money Supply is reduced by calling in overdrafts and reducing lending, so is the Production also reduced and we have a recession/depression. If the banks increase the Money Supply by lending as much as they can and putting to work idle capacity, then the Production increases and we have a boom. There's no mystery to it once this fact is understood. The banks run the economy up and they run it down and profit both ways at our collective expense. All the convoluted theories are nonsense in the face of this fact.

Now that you have the missing piece of information, if you want to read some real nonsense from some highly paid idiots, have a gander at this!

The Keynesian model of government intervention and planning is seen widely as a failure because of the massive govt debt that has been built up. And this was the fatal flaw in his theory i.e. the way it was financed. But if the government deficit budgets were financed by govt owned central banks, then all would have been fine. Financing the mounting govt deficits from private banks played into their hands. Keynes' excuse was that if he didn't support private bank financing, then his theory would not have been adopted at all.

The adoption of his theory gave immediate relief to the general populace (evidenced by some decades of prosperity) only to create a bigger problem down the track (which we have now). Hence the real reason for his comment, “We are all dead in the end”. Keynes also became Lord Keynes which was a nice reward for not elucidating on the flaw in it to everybody.

There was a large and growing discontent with bankers and govts and the way they managed the economies at the time. The adoption of Keynes' theories may have been a successful attempt to derail such movements as C.H. Douglas' Social Credit movement. I'm sure Keynes borrowed heavily from it in forming his theories except Douglas' model would have cut out the banks and the debt. Douglas explained the problems with classical capitalism far clearer than Keynes subsequently did though they were speaking about the exact same problem.

Douglas was an engineer and it has struck me that all the best writing on economics over the years has been written by engineers. I think it is because they are schooled to take the cause and effect relationship very seriously and not be put off by vague or woolly explanations.

C.H. Douglas' writings

Keynes claimed rightly that the economy was determined by the aggregate level of business and consumer demand and that this level of demand was chronically under funded for full employment. So it was the opportunity and even duty of the government to provide this funding through deficit budgets. This would have worked well if not for the fact that the deficits were funded by private banks at interest, as we've noted, which created the long term debt bomb that we are left with now. If governments around the world had financed their deficits from State owned banks, this problem would be non existent today and our economies would be in fine shape. Instead, now the economies around the world are being choked and smothered to pay the bankers their illegal and immoral interest.

Another problem with Keynes' theory is that he did not explain clearly WHY capitalist economies were chronically under funded. He had no excuse as this under funding was explained very simply and very clearly more than ten years before by Maj C.H. Douglas in his writings on his Social Credit movement.

As Maj. Douglas explained, given that we know that almost all money comes into being as loans and the vast bulk of these are for industry, we can see with a little thought that these loans cover the manufacturing costs (the outgoings) of production. But on top of these costs there needs to be a margin for bank interest on those loans and a margin for profit in the final sale price of manufactured goods (and services). These added margins are unfunded and the money to pay for these margins does not exist.

The money to cover the manufacturing costs (provided by the investment and business loans and operating overdrafts) has been spent into the community to cover wages, raw materials and plant costs (which break down to wages sooner of later) and so is available to pay for that component in the sale prices of the production. But the money needed to pay for the margin to cover bank interest and profit for the enterprise has not been spent into the community by the manufacturers and therefore is missing from the community. The community is too poor to buy all the production that it collectively manufactured.

So unless consumer credit is issued to the public, there is not enough money (M – Money Supply) to buy the full production (P – production or GDP) and this inevitably leads to goods being left on the shelves and to growing unemployment.

For an example using some figures. Let's suppose an economy starts the year without any money supply. Industry borrows (at interest) 100billion dollars to finance their production programs. That money is spent paying for wages and for raw materials. Now industry has spent all its money and the community has a money supply of 100 billion dollars. The manufacturing sector now wants to sell all of its production and also to sell it at a profit.

So it's costs are the $100b loan plus $10b bank interest ($110b), plus it wants to make a profit of 20% so it puts a price of $132b on its total production. But the community only has the original $100b that it traded its labor and other resources for to pay for the output. So $32b worth of stock is going to stay on the shelves unsold. What do you think will happen next?

Yes, industry will lay off workers and scale back production and we have an economic recession unless the public can borrow enough money through consumer loans to pay for the remaining production on the shelves.

The other option (and the one Keynes opted for) was for governments to bring in a deficit budget i.e spend more into the community than it received in taxes and finance it through loans from the private banks (who create the new money out of thin air, of course). Because of the temporary nature of loans and the fact that they attract interest, this solution just postpones the problem till next year and then the situation requires an even bigger loan (because of accumulating compounded interest) to pay for the same manufactured output.

The problem with supplying the shortfall in the money supply with consumer credit is that it is secured against future wages that will be needed to purchase future production. It will accrue interest as well taking more money out of the community that is needed to buy future production. So we have a short term solution that creates a much worse long term situation. If, instead, the government provides for this shortfall with deficit budgets financed by private banks, we get the same problem. In practice we have a combination of both these very unsatisfactory arrangements of badly financed government debt and consumer debt.

(as an aside, this is why we need a constantly growing economy to just stand still)

Maj. Douglas' solution was to distribute money to cover this shortfall of funds (the $32b in our example) free as a dividend to all citizens. This money would then swell Aggregate Demand to the level of GDP or Production and ensure a fully employed workforce and a prosperous nation with a minimum of downstream social costs and all very simply done. Other solutions could be equally as effective so long as the money was spent into the community by the government at no cost to itself such as through State bank funded infrastructure projects that would not have to be sold to the population and so not absorbing valuable money supply.

Because Keynes did not explain the mechanism, the problem, or the solution clearly and fully as Douglas did (though nowhere near as widely), it left the citizenry in the dark as to what was happening and thus we all became victims of the banks and to the competing nonsensical economic theories they have sponsored down through the decades to keep us all bamboozled as they continue to rob us blind.

The bankers have robbed us of much more than money, too. They have robbed us of happy, healthy and peaceful societies. They have robbed us of many family members from poor health and depression due to poverty and uncertainty and not to mention from their wars for profit.

Here's a site that explains very well in the form of a story (in text and audio) what has happened to us and how we have come to be dominated by bankers. The Earth Plus 5%

I hope I have shown that prosperity and peace of mind for everyone is attainable with collective knowledge and political will. I hope I have shown that economics need not be a convoluted and 'dismal science'. I hope it is now possible for it to be seen as a simple, straightforward and even exciting discipline given the possibilities that lie before us for personal and cultural advancement.

I'll finish with a final quote from Nikki Alexander's excellent article linked above-


“Money and credit can and should be used to keep the economy flowing, facilitating the exchange of real goods and productive services that meet the needs of society ~ without fabricating debilitating and fictitious debt. This, in fact, was the intention of Article 1, Section 8 of the United States Constitution that authorized only Congress to coin money and regulate its value. The founders of our nation understood that a government does not need to borrow its money from a private corporation. It has the power to create its own money. We are that government and that power belongs to us.”
“Our government has the constitutional authority to create money and issue credit without ever charging interest or creating debt. It can directly spend this money into circulation and extinguish excess currency to prevent inflation. Or it can charge a reasonable interest rate and use this revenue in lieu of taxes.”

Comments

wonderful

thank you, James, for demystifying this. it is truly astounding how much obfuscation has accumulated on this topic.

impressive illusion

thanks APea. Yes, the mountain of disinformation is quite a feat.

I'm scrambling

to decipher, arrange, and form a comprehensive laymans structure of it all.

It starts off sounding like socialist redistribution, but then veers off into the colonial script aspect. It's definitely morally guided. I shall return. :Cool
-swits

looking forward to your

looking forward to your return and your questions, swits. The essay relies on the reader understanding how money is created. If you are not totally familiar with that then it would be good to read the link to my earlier writing. for clarity, here it is again smiling
http://www.winterpatriot.com/node/306

I've focussed on the economics and have left politics out of it. Though politics is largely about the control of the economics!

Douglas' Social Credit can sound like socialism (if that is what you are referring to) except it is not redistributing someone else's money. It all new money and very necessary for a prosperous economy. It doesn't require a large and intrusive govt to do it. You could look at it like a company dividend and everyone is a shareholder. There are other ways of doing it though.

The main points i was trying to make is that laissez-faire economics only works for the rich just like in Victorian times because it chokes down the economy. And that the gold standard does exactly the same thing. Both are very misguided.

excellent james

thanks for explaining it, finally had a chance to read this and next opportunity I will follow the links!

Thanks Joe

Thanks Joe. Any questions? smiling

my question:

can anything bring about an end to the octopus?
I've been catching up and reading your latest comments, it all makes damn good sense and I'm glad to read it even though it leads to this frustrating question :/
I hope the holidays are treating you kindly.

Cheers and merry Christmas everyone!

end to the octopus?

"can anything bring about an end to the octopus?"

I believe so. It is a pity John Friend didn't come back because i would have liked to discuss the opportunity cost involved in getting behind or believing in Ron Paul in any way. The whole idea of putting up false hopes like Ron Paul (and Obama before him) is to impose an opportunity cost on people who want change and neutralise their energy (think back to 2008). But to do that they need to keep people like us in the system and opting for the 'lesser of evils', at least.

as i said in a comment over at Twelfth Bough-

"The people running the system know they have to keep offering hope to keep those of us with heart in the game. Obama was the last one and RP (knowingly or not) by all the signs is the next. So someone like RP is a necessary part of the system.

All this says there is no hope from within the system and that is a very disheartening thing to face. It has a lot of implications, too, but that doesn't mean there is no hope. There is, but only after the first lesson of dealing with psychopaths is thoroughly learnt. And that is that the only way to deal with psychopaths is not to deal with them (i.e. stay out of their system - ed) which is what Buelahman is saying by calling for non-compliance. The best ways are non-confrontational like throwing out the teevee for a start and by simply doing something else."

That they want us in the system tells us that not only do they think there is an answer to them but that this answer lies outside the system. Which means we do something different outside their system (which is obvious once you think about it). And there are people out there doing just that. I'm working on explaining that something different plus some wrinkles. May take a week or so. typing away

I've been wanting to explain how the current system works first and what is wrong with it so that the solution can be grasped in all its potential. It's grass roots stuff, though, so it won't change the landscape overnight. But at least it is "heading in the right direction" wink

You won't be surprised, Joe, that it involves LETS

Great post!

I've always struggled with economics to tell you the truth, so let me tell you how much I appreciate your concise analysis here. It's so nice reading something that is completely outside the standard BS you read in economic literature, and that actually makes sense! My gosh, in college we had to read "Globalization and Development" and Milton Friedman books -- the standard globalist banker perspective. Not only boring, but completely at odds with reality as I was seeing and experiencing it.

I've read this post twice now, and I'm still trying to digest everything, but I do have some initial observations.

First, about Ron Paul as a candidate for president. He is clearly the only sane, rational person that has any shot at becoming president. As you probably know by now, I'm particularly concerned with these wars we've been fighting for Israel since 9/11, and Ron Paul is definitely coming out against these wars. I've criticized him for not addressing 9/11 and getting to the heart of the matter, but I do applaud him for taking this anti-war, pro-Constitution stance on these war/peace and civil liberties issues. He's also come out strongly against the Fed, the bailouts, corporate welfare, ect. On the two most important issues to me, he is at least headed in the right direction.

Second, I think you are exactly right regarding the gold standard nonsense that Ron Paul talks about. This stood out to me:

"Ron Paul with his 'gold backed currency' is playing directly into the hands of the bankers he says he is against. He should be avoided for that very reason regardless of what anybody thinks of his motivation and whatever else he might say. [...]

Ron Paul is currently popularising the idea of a gold backed currency together with a form of Laissez-faire economics i.e. little to no government planning."

I think you're right. And his framing of the debate in the standard "big government vs. little government" narrative is completely backwards, as you suggested in the title to this post. It's more about honest, competent, and fair government vs. corrupt, whoring, lying, psychopathic-run government.

Thomas Jefferson said it best:

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

jf please clarify

so on your two most important issues, 1) wars for israel and 2) ending the fed, you think RP is heading in the right direction. even though he does not link wars for israel to 911, which is a huge flaw that coincidentally protects israel.

and even though the bankers themselves will need to end the fed soon as a necessary step in their process to introduce a brand new world currency. they are deliberately debasing our currency because it has outlived its useful life and needs to be replaced. conveniently, this will involve "ending the fed," just as so many people want. then they will replace the fed with a new version, different name, different currency, but starting afresh with the bankers still in control via the gold-backed mechanism or whatever one they choose, as long as it is not government backed as James describes. that will be a huge disappointment to all those people who think ending the fed is their victory. they will find out too late that they are still slaves to the bankers. RP is helping very much with this part of the problem by helping to end the fed but without promoting the correct replacement currency. regrettable. win win for the bankers. no wonder he hasn't been killed in a plane crash.

you say you agree with James that "Ron Paul with his 'gold backed currency' is playing directly into the hands of the bankers he says he is against. He should be avoided for that very reason regardless of what anybody thinks of his motivation and whatever else he might say. [...]

if you agree that RP is playing directly into the bankers' hands, then how can you still support him or think he is headed in the right direction?

the currency is the bankers' control mechanism. RP supports a currency that will allow the bankers to have a fresh new start at controlling humanity. bottom line. they got 100 years out of the US dollar. they have much more technology at their disposal now. if they get their new currency, the clock resets at 0. the slavery will be total. this will be the refinance from hell.

we think RP is controlling the opposition. he is taking as many angry, intelligent people as he possibly can into a useless cul de sac, out of the equation, so that the bankers can get rid of the fed and start their new world currency. RP has no chance of being elected. he is strictly in the game as cointelpro.

in light of the information James has presented, there are only a couple of reasons why people would continue to support RP, such as they don't comprehend what is happening, they are in denial about what is happening, or they like what is happening.

JF's clarification

"in light of the information James has presented, there are only a couple of reasons why people would continue to support RP, such as they don't comprehend what is happening, they are in denial about what is happening, or they like what is happening."

LOL! Has it ever occurred to you that some of us may have differences of opinion or different interpretations on things? Jeez...

Regarding Paul's stance on 9/11 and Israel, yeah I agree, I can't get on board 100% until he addresses these facts. Going one step further, I don’t think we can move forward as a society until we address these facts.

I called into Rivero's show and discussed Paul’s stance on 9/11 and Israel at length with him. You can find it on YouTube if you haven't seen it. I can't support anyone 100% unless they are addressing 9/11 and the Jewish criminal network that has control here. We need someone to challenge their narrative, but thus far, Ron Paul has not been that person sadly. Does that mean I don't support him at all? No, I do support many of his positions, and do think he offers the American people a clear alternative to the war-mongering Israeli-Jewish lobby whores that dominate the American political scene.

Is Ron Paul headed in the right direction when it comes to US foreign policy? Absolutely. He is the only one against war, against the Patriot Act, against the latest defense bill, against torture, and pro-peace. Of course he could go a lot further on these issues, and he has thus far not called for any investigations or arrests of these war criminal psychopaths in Washington and New York. Not going to cut it if we want any real change…

Ron Paul has talked about the gold standard, but to my knowledge it is not something he is actively campaigning on. He is campaigning on auditing and eventually ending the Federal Reserve. That seems only appropriate to me, and certainly a step in the right direction, does it not? He has come out strongly against the bailouts, Wall Street criminality, corporate recklessness and corporate welfare. Is anyone else coming even remotely close?

Yes, I completely agree with you and james that the real solution is taking the currency out of the criminal bankers hands. Maybe we should start lobbying the Ron Paul people to take these considerations into account? Oh wait, he’s cointelpro, just like me, right? laughing out loud

james, I hope you sent this post to Ron Paul's people. I'd love to hear their response.

Question for AP and others reading here:

If Ron Paul is cointelpro sent in to further the bankers agenda, what do you propose we do? In my opinion, the bankers agenda is already locked up, the New World Order is here and has been here for some time now. Should we try doing anything about it?

John, you have raised some

John, you have raised some points well worth responding to but i don't have the time i'd like to do them justice at the moment but will return later in my day (on the other side of the world)

i see.

Has it ever occurred to you that some of us may have differences of opinion or different interpretations on things?

absolutely. who agrees with anyone 100%? there are always differences of opinion. if someone is out there standing up for a candidate, making arguments on their behalf, etc., that is all the candidate wants. the candidate is prepared to be challenged, especially from friendly supporters who just don't agree 100%. in the end, if someone votes for a candidate, that is the same as supporting the candidate 100%. the candidate just wants the vote. 1 vote delivered = 100% support, and the other percentages called "differences of opinion" don't matter at all anymore. furthermore, from past experience, we have seen over and over again that once the candidate has the votes, the candidate does just exactly whatever the hell he/she wants. so i fail to see how not supporting RP 100% means anything. voting support is a binary equation -- you either give your vote or you don't. either you support the candidate or you don't.

Maybe we should start lobbying the Ron Paul people to take these considerations into account?

yes. that seems like such a funny idea? absolutely people who want to know the truth should be putting RP's feet to the fire on this issue because it is of the utmost importance. most likely, if you tried, you would get the same result as others have reported on trying to get RP to respond to evidence presented about 911.

http://www.rense.com/general92/paul.htm -- from a post at aan's site: http://aangirfan.blogspot.com/2011/12/iowa-laughingstock-of-country.html

Yes, how can Ron Paul have been in Congress all these years and never once have been shown the conclusive evidence that I and a thousand other people sent to him. How can he sound like O'Reilly or Hannity every time 9-11 is brought up.

it sounds like people send info to RP, important information. i would imagine they do. i assume people have even sent him information on this gold standard problem. if RP is cointelpro, he would not be inclined to respond with a satisfactory answer. of course, that is no reason not to challenge him unless you wish to save him the embarrassment.

what do we propose we do? we're doing it -- opening our mouth. have been doing it for a long time, since 2007. we have no regrets. no matter what happens, we can put our head on our pillow at night and say that we tried to pursue the truth and share it with people, without agenda and without taking a dime from anyone or asking a dime from anyone.

In my opinion, the bankers agenda is already locked up, the New World Order is here and has been here for some time now. Should we try doing anything about it?

we disagree. the bankers need a new currency to replace the one they trashed. they don't have it yet. they have many other advantages and countless despicable toads on their payroll, but they don't have a new currency yet. and they cannot continue controlling the world without the new currency. so it's not over yet, and what we are trying to do is prevent the disaster of giving them a new currency. since RP is working toward a currency model that benefits the bankers, we are trying to alert people to this fact.

The Bankstas New Currency is the SDR

The Bankstas New Currency is the SDR. The question is whether they are going to give it any sort of gold backing or not. Preferably they would not, so that they could print it to their hearts' content, but they will give it gold backing if they have to. Besides, what good did it do the USD that it had gold backing? They printed it in excess all the same, and then simply defaulted by abolishing the backing. It is called bait and switch. It gets the gullible plebs every time. Obama's promise for change people can believe in was one fine example of just that.

so what you are saying is

a gold back currency gains us nothing. it is a shiny thing waved in front of the people to give the illusion that the currency is stable....

agreed.

but they will give it gold backing if they have to

do you mean that if enough public pressure is brought to bear on the banksters, they will bow their stiff necks and give their new currency a gold backing as a goodwill gesture to the gullible plebs? kind of like a compromise? then they will collect all the gold to keep the currency stable of course? and then, after they have all the gold, they change the rules anyway, like has happened so many times before?

seems to me that RP delivers the public pressure to do this extra step, to make this "compromise," and the gold backing is simply a way for the banksters to fleece as much gold off people as they can. so again, RP seems to be in opposition to the banksters and yet he is advocating monetary policy that -- when extrapolated out enough steps -- benefits the banksters.

bad.

A. Peasant - I was merely

A. Peasant - I was merely pointing out that the IBC already have their replacement currency in which they want the nations of the world to settle their trades. It is the IMF's SDR.
http://www.imf.org/external/np/fin/data/rms_five.aspx#cvsdr

What is still frustrating them is that national governments are not borrowing enough in SDRs. Take-up of their crap, so to speak, is too slow. But they are hoping that through their creation of this GFC, which is but a debt crisis created by them, they will be able to offer the SDR as a solution to the nations of the world, whereby national debts will be refinanced by national governments by borrowing from the IMF in SDRs, against the assets and future income and productive capacity of each nation.

In order to have the SDR replace the USD as the World Reserve Currency, they might even go as far as giving the SDR some sort of gold backing, so as to make it all look safe and even desirable. That is what I meant by "if they have to." They want it bad, really bad, and so bad that they might even give it this gold backing to start with, but this will be nothing but a bait and switch strategy. I say that simply on the strength of the fact that we are dealing with psychopathing and parasitic liars. This is just how they operate.

SDR's and currency

SDR's, as you point out cb, is a device for settling balance of trade payments between countries. But you incorrectly describe it a a 'currency'. It is not a currency as the $US is. It is not traded at your local grocery.

The bankers want a One World Currency. if they use SDR's to start it with, they will have to change it substantially till it is unrecognisable as the old SDR it was. To facilitate its acceptance they may well sell it as gold backed, as you suggest, and A Peasant's point is that yours and Ron Paul's promotion of the beneficence of gold backed currencies will help these bankers introduce their diabolical money and destroy our economies and our freedom (what's left of both, anyway!) with it.

As you point out cb, these bankers are psychopathic and parasitic. So why help them?

James, just because some

James, just because some implement or instrument could be misused, is no argument against its proper use. Any way you look at it, you cannot get away from these two fundamental truths, that when you are paid in fiat money for some good or service provided, you are merely holding a promise of future payment, but when you have been paid in gold or silver, you have been paid in full.

Being paid in fiat money is like having one's house built in centimetres. There has to be substance making up those centimetres for your house to be of use, and in an analogous way received payments and savings should have more reality than mere IOUs, promises of future payments upon demand.

I don't know about others, but when I am paid for goods and services I provided, I want to be paid in full, and that pretty much settles the argument from where I stand. Paying people with IOUs and then expecting them to carry the many risks that they will not in the end be paid is simply wrong.

And, whichever way you twist it, that is precisely what a fiat money system does to providers of goods and services, and it is quite wrong.

James, may I also adduce the following?

Aaron Russo talks with Ron Paul - The Crimes of the Federal Reserve
http://revolutionarypolitics.tv/video/viewVideo.php?video_id=17153
.

Crimes of the Fed

cb, I'm a little short on time so i have not watched the video. But from the title, it is about the wrongs of the Fed and I expect i would have no arguments with any of it. If there is a particular point in the film you would like me to comment on, I would be happy to do so if you would elaborate on it for me.

Russo and Paul

in the video, Aaron Russo claims that because the Fed creates money out of thin air (a fiat currency) it has no more backing than 'Monopoly money'.

This is totally wrong. ANY currency, whether 'gold backed' or fiat, is backed by the goods and services that can be bought with it i.e. the GDP of a nation. You may have heard one definition of inflation that goes "too much money chasing too few goods". Note it is not "chasing too little gold"

The goods and services are of far more direct value than gold because for gold to be of value it has to be exchanged for goods and services. You can't eat gold nor will it keep you warm of itself. You have to exchange it to live. The "money bit" in gold is it's potential to be exchanged for goods of real and direct value.

So because this backing of the GDP is missed, all the arguments that follow about fiat currencies are misguided and wrong. The equation P=MV says the money supply is backed by the production of goods and services.

This is not a defence of the Fed, of course.

the rights and wrongs of IOU's

James, just because some implement or instrument could be misused, is no argument against its proper use.

That is somewhat of a truism, cb, but you give no indication as to what you are applying it to. So i can't comment further on it.

Any way you look at it, you cannot get away from these two fundamental truths, that when you are paid in fiat money for some good or service provided, you are merely holding a promise of future payment, but when you have been paid in gold or silver, you have been paid in full.

I think it would be more correct to say you have been paid in gold and silver because "paid in full" could mean a sack of potatoes to someone else.
Money can be seen as an IOU and is probably best seen as an IOU. You are correct in that. But lets get practical for a moment, when was the last time your cash was refused as payment of goods or debts? When could you not redeem your IOU's?

The US govt will only accept these 'legal tender' IOU's as payment for taxes so this assures that these IOU's (fiat currency) have an abiding value because there will always be a demand for them to pay Uncle Sam.

Being paid in fiat money is like having one's house built in centimetres. There has to be substance making up those centimetres for your house to be of use,

That is quite artful, cb. I'm impressed how you turned my analogy around. smiling

and in an analogous way received payments and savings should have more reality than mere IOUs, promises of future payments upon demand.

No, it shouldn't have more reality and, no, it can't have and still function optimally as money. Let me explain this seemingly odd statement. The component of a dollar bill or a kruger rand that makes it money is the abstract idea of value held in people's minds. The other part, be it gold or paper, is a commodity and this part actually interferes with the idea of the money being a unit of exchange to facilitate trade between goods and services.

Once money is seen as a commodity, it encourages trade in the money (as commodity) itself and thus hinders the free exchange of goods and services. Its value rises and falls as any other commodity and thus hinders the pricing of the commodities it is supposed to help be freely traded. Money should never be created just to make another commodity to be traded and made money from itself. This is a perversion of its intended use.

Money as a commodity also tends to be hoarded and thus taken out of circulation and so denying the community the use of it. So the money supply is effectively reduced by such practices and the economy as a whole suffers.

I understand that this notion of money being actually an abstract idea in people's mind's is hard to get your head around having grown up thinking of money as a commodity (this is the bankers greatest trick in my view). But just as a nation's money is backed by the goods and services produced by the nation regardless of what the money supply is said to be backed by, so too is money an abstract idea regardless of any physical form it may be attached to. It is just as a measuring system is and it's usefulness is due to this very fact.

As an exercise, take a coin out of your pocket and look at it and try to determine which part of the coin is the 'money' part. Each of the metals in the coin are what they are. the engraving is what it is. Which bit is the money bit? Melt it down and try and extract 'the money bit'. It's not there in physical form. It is an agreed notion in people's minds. It is worth dwelling on this mental image for a while.

I don't know about others, but when I am paid for goods and services I provided, I want to be paid in full, and that pretty much settles the argument from where I stand.

That is your personal preference and I have no argument with you in that regard. Though you may find it a little inconvenient paying for big ticket items such as your car or house with gold coins. Or paying bills by mail or over the internet. Travel might become a little dodgy, too.

Paying people with IOUs and then expecting them to carry the many risks that they will not in the end be paid is simply wrong.

The "many risks" you mention don't seem to play out in everyday financial life. So I take it you are talking hypothetically.

And, whichever way you twist it, that is precisely what a fiat money system does to providers of goods and services, and it is quite wrong.

If I have twisted anything, please elaborate specifically what and how.

I understand you think it is wrong and i accept that.

Being paid in gold, versus IOUs

James, regarding the first para, I was referring to your argument that gold backing of the currency would enable the bankstas to crunch the money supply, using a shortage of gold as an excuse. This would be a misuse of the gold backing arrangement, and I was suggesting that such potential misuses are no argument against providing a gold backing for the currency for the honesty and benefits it would have for those receiving payment for their goods and services. Besides, they can and are crunching the money supply already with the fiat currency as it is, so the argument seems academic. The problem lies primarily in lawlessness, although I grant that hoarding of the commodity backing the currency is a potential problem, and the system would have to be set up so as to circumvent and minimise the effects, not to mention intentional manipulation.

The video clip is not that long, and it details the way people's savings and purchasing power can and are being stolen through a fiat money system. There is no end to the thievery and chicanery that fiat money systems are prone to by those in control of the currency, and the strongest arguments for gold and silver backing of the currency stem from these and related problems.

An honest, commodity-backed monetary system has far fewer problems with it, in my view, than a fiat system, which is far more prone to dishonesty, thievery and manipulation, and that is what the clip shows.

Clarification

James, a quick correction to my first para. Strictly speaking, potential manipulation of a gold backed currency is an argument against it, but my point is that it is not a decisive and overwhelming one. Any currency is prone to manipulation, and that needs to be taken accounted for and guarded against the best we can. The rest of my argument here makes the point that fiat currency systems are even more manipulable and corruptible, and precisely because they do not give people an easy and automatic mechanism to defend themselves against thievery and fraud by the guardians of that currency.

With gold backing, the people have an automatic and easy means of protecting themselves when fraud is suspected, or they do not trust the system, and can expose that fraud by redeeming the digital and paper promises, the IOUs, they have been given.

In short, with a gold backed currency, it is much easier for the people to protect themselves against malicious thievery of their purchasing power, but also much easier for them to keep the bastards honest.

Strictly speaking, potential

Strictly speaking, potential manipulation of a gold backed currency is an argument against it, but my point is that it is not a decisive and overwhelming one

cb, if a market can be manipulated, it will be. All markets are currently manipulated and the bankers are the chief manipulators. And they do not limit themselves to a moderate amount of manipulation, either. They are after all, in your own words, psychopathic and parasitic and as such know no boundaries to their avarice. So the point is "decisive and overwhelming".

Given that you are advocating this gold backed system, it is on you to explain how these future controlling mechanisms would work. Due diligence calls for more that opinions and vague hopes. If you want to convince people, you need to lay out your argument.

Fiat currencies and 'gold backed' ones are both easily manipulated if they are seen and treated as commodities. As commodities they are seen as wealth itself rather than something merely to facilitate exchange. So they will be traded, shorted and abused resulting in yo-yoing prices. Also, if they are seen as wealth, as is current, then both these currencies attract interest which is the ongoing fundamental force behind chronic inflation.

A fiat currency has the possibility of being a non-commodity currency but a 'gold backed' one is a commodity by definition and cannot avoid it. It will always be seen as wealth in and of itself. So trading, hoarding and lending out at interest will go on to the detriment of the economy and the community. There's no way out of it with a gold backed currency.

Laissez-faire economies with gold backed currencies, both of which Ron Paul advocates, often in the past had little or no inflation by causing chronic deflation through having a money supply smaller than the productive resources on a nation. So the rich had a no inflation economy yet they could gain interest on their money. In other words, the rich ate their cake and still had it too. What's not to like for them? BUT it was at the expense of the rest of society especially the poor who had to suffer deflation, unemployment and hardship.

This is the scenario Ron Paul wants people to go back to. As i explained in my article, every economy to maintain full employment (i.e. P=MV) needs to distribute large sums of money into the economy to cover the increase in value of production over costs. As i explained the costs are funded but the margins for bank interest and profit margins are not. so there is a shortfall in the money supply to purchase all the production. A Laissez-faire economy is committed to NOT funding that added margin. So it will cause deflation and unemployment.

For the economy to expand, whoever is issuing the money has to go and buy an equivalent amount of gold before it can do so. so they have to spend the money twice; once to spend the money into the community and once to buy the gold to allow them to do that. Kinda nuts don't you think?

What causes inflation?

James, you are losing me. You say that interest charged on borrowings is what causes inflation. This is news to me. Did you not argue in your article that inflation is caused by M > P?

I think that this was correct, and something that is commonly referred to as (excessive) money printing. I have no idea how or why you should, or could justifiably, blame inflation on interest being charged on money, of whatever kind, backed or unbacked.

If anything, the money that bankers suck out of the real economy through interest charges, unless it is spent back into the real economy afresh, should have a deflationary effect.

inflation

bank interest causes chronic (or background) inflation through causing prices to rise. it is an added cost while not contributing any value.
When banks put up interest rates, prices have to rise. That Monetarists use rising interest rates to squash inflation is insidious because they do so by deflating the poorer sections of the economy and community to compensate. Laissez-faire all over again!

Inflation is also periodically caused when the money supply is increased beyond the productive capacity of the nation.

You are at (or past) the point of going round in circles. I notice that you didn't respond to my call for you to lay out your case of how a gold backed currency would operate in a market but picked up on the inflation point only.

Given that you are advocating this gold backed system, it is on you to explain how these future controlling mechanisms would work. Due diligence calls for more that opinions and vague hopes. If you want to convince people, you need to lay out your argument.

I would like to know how it would avoid both inflation and deflation while providing full employment.

James, you have that one

James, you have that one wrong on high interest rates causing inflation. Or at least the official rationale for raising interest rates higher is rising inflation. By making money more expensive, the central bank raises rates in order to reduce demand for money, and hence start restricting the money supply.

At least the theory is that when rates are low, people are able and willing to borrow more money into existence, which causes inflation when they have borrowed so much that M > P, so the central bank increases rates so as to reduce demand for money, and the money supply starts to slow and shrink, which in turn stops inflation as the economy starts being starved of money.

This is fundamental, and given your lack of a grasp of this fundamental mechanism, further argument seems of dubious value. You just don't like the idea of Ron Paul getting the Presidency, which is fine, but your argument against him fails to carry.

Also, it is a bit rich, not to mention unnecessary, for you to say that I am running around in circles. Rather, from where I stand, I backed you into a corner and now you are lashing out by attacking the man, instead of the argument.

But here is the deal, James. You publish those parting comments from me and you can have the last word. I will be checking back for it. Thanks for your time.

the last word!

Yep, that's the official explanation, all right, cb. And we know how reliable official explanations are in this upside down world. Especially when they have come out of the mouth of the irreplaceable and late lamented Milton Friedman; the globalist bankers' favourite economist.

I didn't notice that you had backed me into a corner but perhaps I wasn't paying enough attention. Nor had I noticed that I was lashing out at you. I'm sorry you felt that was the case. I hope I didn't upset you by asking you twice to outlay how your gold backed system would work in the market place.

Regarding my time, you're welcome, cb. And thanks for the last word smiling
All the best with your next project.

Oh, James, upon a second

Oh, James, upon a second reading (sorry, I am getting a little rushed) I noticed that you are aware of higher interest rates being used to squash inflation. I agree with you that this is insidious, but for your thesis to work, or rather your claim that higher rates cause inflation, it cannot be the case that higher interest rates squash inflation. So, you will have to decide as to which thesis you believe. Do higher rates cause, or squash, inflation overall? You cannot have it both ways. Please publish this as well, and then you can have the last word.

Even so, if you remain civil with me, as you seem to be a nice person, I might well engage with you further, as time permits, but only by invitation. Take care and keep up the good work.

the last last word!

Spoke too soon didn't I smiling

The Monetarists' practice of raising interest rates does seem to work but not for the reason given. Surprise, surprise!

I have actually already explained this, cb. The interest rate hikes add to manufacturing costs (and all sorts of other costs) and so put inflationary pressures on prices. Hence inflation. It will also dampen enthusiasm for new loans but the critical factor that is never mentioned is the banks lending policy. So when the banks get round to restricting lending (usually quite a delay), the money supply shrinks and they keep this up until the deflationary effect on GDP and employment out weighs the inflationary effect of their increased interest rates plus whatever inflation was running before the rate hike.

So the bankers win because they are getting higher interest returns on their loan money and they also have the double bonus now of low inflation, too, courtesy of the impoverished working class and mostly small manufacturers who have gone out of business.
It's a nasty practise.

Thanks for your best wishes, cb

I hear ya

I agree 100% with this:

"in the end, if someone votes for a candidate, that is the same as supporting the candidate 100%."

I'm not sure who the hell, if anyone, I will actually vote for, I'm so disillusioned with the entire scene. But I do think RP is introducing some much needed sobriety to the political discourse taking place, especially in Republican circles.

Regarding lobbying the RP folks about the issues we're concerned about, yeah, I've read much of that stuff and seen many of the videos of him absolutely dismissing 9/11 Truth. Painful to watch. Maybe even unforgivable.

I certainly don't think he's the savior by any means, but if enough people wake up to the facts we're talking about, who knows? Maybe he will get on board? It's a long shot, but one I think is worth pursuing at this point.

Another thing I've been thinking about for a long time: since no one in the mainstream is willing to address the facts, why don't people like us start running for Congress or President? Yes, I know, a MAJOR LONG SHOT, but what else can we do?

You write:

"what do we propose we do? we're doing it -- opening our mouth. have been doing it for a long time, since 2007. we have no regrets. no matter what happens, we can put our head on our pillow at night and say that we tried to pursue the truth and share it with people, without agenda and without taking a dime from anyone or asking a dime from anyone."

Absolutely agree 100%, that is the spirit I am operating in believe it or not -- and yes, you've been at this much longer than I have, so please consider I am still learning a lot of things, but I think I do have a fairly good grasp of what's going on. I think it's important that we, a collective we, as a society, open our mouths and take a stand for truth and justice. And I applaud and admire you and james and aangirfan and kenny and Greg and everyone else that has been doing this for so long. It gives me tremendous hope and courage to tell you the truth. It at least proves there is a platform for concerned people of the world to organize, network, and figure out how we want to go forward as human beings. At least for the time being, the free internet is their greatest threat at this point.

Finally, you disagree that the bankers and Jews don't have their plan already locked up in place. From where I sit, these guys have had their plan in place for a while now, and we're currently going through the WWIII scenario that Albert Pike discussed. The New World Order is here. I'm doing what I can to expose and resist it. And I don't want to discount Ron Paul as a potential ally in this struggle -- at least not yet. But I do understand your and james' perpsective.

Merry Christmas everyone!

back to the economics

John, my post was about the economics that Ron Paul is advocating and specifically adherence to the gold standard and his backing of laissez-faire economics.

I argued that these two positions would lead to depressed economic conditions as they have throughout history when they have been used. I described how and why they would do this and have concluded that backing Ron Paul would lead to financial disaster.

You and others have said i have made it understandable. You said, "It's so nice reading something that is completely outside the standard BS you read in economic literature, and that actually makes sense!" If you understood my reasoning and agree with it, then i don't see how there could be any wriggle room regarding RP because i didn't leave any.

Yet in your comments you have mildly praised Paul and said such things as he is worthy of consideration in the presidential race. APea has asked you, "if you agree that RP is playing directly into the bankers' hands, then how can you still support him or think he is headed in the right direction?"

I am puzzled by this too. If i have missed where you have answered this, please point me to it. Or if you disagree with my reasoning regarding the economics, I'd be happy to discuss it further.

Wriggle Room on Ron Paul

James, excellent article, and on a ceteris paribus basis I fully agree. I agree, that is, on the assumption that all other things remain equal, or constant, unchanged. But how good or realistic would such an assumption be? That is the question, isn't it? At least for your assertion that your argument leaves no wriggle room on whether one should support Ron Paul.

If there should be reasonable grounds to expect, for example, that Ron Paul might, or would, put the bankstas on trial and confiscated their gold hoard and ill-gotten gains, and then fixed the currency to gold at a price where M = P, then this would avoid the financial and economic apocalypse that otherwise, as you have argued, would obtain.

Put in another way, not all of your readers might accept your assumption that all other things would remain equal and unchanged, and so quite reasonably continue to see merit in electing to the presidency the only person that a fully awake person should want in that office.

Don't you agree?

Hi cb

are you introducing a 'strawman argument'? You say that my argument is dependent on 'all things remaining the same' (something that i did not state though you indicate that i did) but you don't explain that nor identify what those things are that need to remain the same.

Then you proceed to knock down the argument that you have introduced by appealing to the seemingly self evident notion that all things don't remain the same with the implication that therefore my argument doesn't stand up or won't stand up given time.

Have i misread you?

My argument is based on the fundamental and constant equation of economics, P=MV, that no economist that i have heard of specifically disagrees with even though they ignore its implications in their pronouncements and prescriptions.

In the middle of your argument that I have outlined above you insert this hypothetical-
"If there should be reasonable grounds to expect, for example, that Ron Paul might, or would, put the bankstas on trial and confiscated their gold hoard and ill-gotten gains, and then fixed the currency to gold at a price where M = P, then this would avoid the financial and economic apocalypse that otherwise, as you have argued, would obtain. "

There are no reasonable grounds to expect any of this (except the collapse, of course) that I am aware of. And in any case, if you should ever be able to have enough gold at exactly the right price to equal the potential amount of P (production), what do you do the following year when a higher amount of P is possible? How would you avoid restricting P to the level of the year before?

If you have M (the money supply) being free to be increased (or decreased) to match the productive capacity of a nation (and this was carried out by a government agency), then you would have an extremely stable economy and with it and an extremely stable currency.

The other issue that needs to be considered in conjunction with all this is that the money supply needs to be issued by the government, something that Ron Paul does not emphasize. In fact, he is mute about it, to the best of my knowledge. This is a glaring omission.

If a government issued the currency at no interest (or largely at no interest), then in conjunction with a correctly regulated money supply, there would be no inflation or deflation.

There would be no need for anyone to exchange their currency for gold because the currency's value would be stable and the goods would be available to exchange it for. The two reasons for having gold instead of currency would no longer exist.

So why would anyone knowingly vote for someone whose economic policies would bring even more economic catastrophe, with all its human cost, down on their heads?

The proffered answer is that Ron Paul is less bad than the alternatives. But is that true? It may be true from within the system. But it may well not be true outside the system. This is a huge incentive for the 'system' getting behind Ron Paul; to keep those with the energy, intelligence and opportunity to change things in the system where their efforts can be controlled and negated (as has happened too many times already).

The political system is the PTB's system. They control it. So the challenge for them is how to keep everybody capable of changing anything IN the system.

How many false hopes do people have to endure before they give the political system away as a bad joke and do something constructive instead?

Ron Paul and the Bankstas

Yes, James, you have missed my point. Your argument that Ron Paul should not be elected because the sound currency he would introduce would create an economic crunch has a number of hidden and not so hidden assumptions, which not all your readers might agree with. I am also pointing out that without those assumptions, your argument is invalid, in that your stated premises do not force the conclusion.

One of your assumptions is that if Ron Paul introduced gold backing for the currency, this would be done at a price and ratio where M would be less than P (M < P), and thus resulting in an economic crunch. But Ron Paul, if elected, could just as easily introduce that gold backing at a price where M = P, and thus not cause an economic crunch. And if he introduced that gold backing at a higher gold price, so as to make M higher than P (M>P), then he would cause inflation.

In short, your argument makes an assumption about the gold price at which the currency would be fixed (backed), and namely that it would be fixed at a level that would make M

And, if there is no reason to prefer your assumption that the gold price would be fixed at a level where it would cause a crunch, as opposed to assuming that it would be fixed at a level where M = P, or indeed a level at which M > P, then Ron Paul's proposal to tie the currency to gold cannot be an argument against his election to the Presidency.

Put another way, your argument is valid only if one accepts the assumption in question, but the problem for your argument is that the assumption you are making is not compelling, and if one rejects that assumption and makes a different, more compelling assumption about the price at which gold would be tied to the currency, then your argument is shot.

Again, it is shot because Ron Paul could just as easily back the currency at a gold price that would make M = P, and indeed M > P. There is simply no reason to go along with your assumption that he would introduce that backing at a price where M < P.

I will answer your other points in another message, following.

assumptions

hi cb, you say my argument rests on a number of assumptions and go on to mention one and that is that the money supply will not be set to match the productive capacity. Given that it is a moving target, i'd say that assumption is more than reasonable. And you agree with me in your next comment that a money supply tied to gold does not have the flexibility to adjust from year to year like a fiat currency has.

So a currency tied to the amount of gold on hand is going to cause problems for the economy pretty quickly.

I have two points against Ron Paul and the other is his adherence to the laissez-faire theory of economics which is absolutely against deficit budgets. In my article i show how that will lead to a shrinking economy. And history bears this out also.

James, to be fair, I share

James, to be fair, I share with you the concerns that Ron Paul will be used by the bankstas to impose on the people unthinkable austerity, and total economic devastation. They would do this by granting his push for sound money, while resisting any attempts at debt forgiveness, not to mention the confiscation of their gold hoard and ill gotten gains. This would be the least preferable option going forward, and there is a real chance that this will obtain if Ron Paul is elected.

So, I am not disputing the risks and the dangers, but uless the Office of the President is going to be disbanded, then I cannot see how the American people, or the rest of the world, will be better off by electing someone else into that post. The man is said to have a perfect record of voting along constitutional lines, and unless you do not consider it important that the leaders of the country respect the Constitution, then it is the bottom line, and there is simply no contest.

opportunity cost

cb, can you point me to where Ron Paul has advocated debt forgiveness and where he has said he will confiscate the bankers gold? I was unaware he had talked about either of these things.

Ron Paul will devastate the economy all by himself. He is talking about reducing govt spending by a trillion dollars. This will reduce the money supply by an equal amount which, in turn, will reduce production by a similar amount because P=MV. We're talking serious depression here. This is hardly "the lesser of two evils" any more.

In any case, to put your faith in Ron Paul is to put your faith in the system. And many people have pointed out, the bankers control the system regardless of the constitution.

So everybody's time would be far better spent working on alternative answers outside this very broken electoral system. In other words, backing Ron Paul (or any other candidate) imposes a very real opportunity cost on people i.e. the cost of what could have been done instead.

Okay, James, I am all eyes

Okay, James, I am all eyes and ears. How do you propose putting the bankstas out of business through peaceful means, if not through the election of the only candidate who would return the power to created the national currency to the Treasury? What realistic alternatives do you see there to achieve this without outright revolution? After all, the realities are that the US is now a police state with its Constitution and Bill of Rights legally suspended. Opponents of the system can now be arrested and held indefinitely without charge, and worse. So, what are you suggesting that people do at a practical level, instead of trying to do it through Ron Paul in the Presidency?

an alternative to banging our heads against a brick wall

"After all, the realities are that the US is now a police state with its Constitution and Bill of Rights legally suspended. Opponents of the system can now be arrested and held indefinitely without charge, and worse."

Are we agreed that the system is clearly and obviously not working?

Are we agreed that the rule of law is broken? That the government does not see itself constrained by law?

Are we agreed that elections have been rigged in the past?

Is it reasonable to expect them to be so in the future?

If so, it should follow that putting continuing effort into this lawless system is a waste of time. And IF there is an answer to putting things right from outside the system, then it follows that putting effort into the current system is worse than a waste of time because we are foregoing an opportunity to change things.

It has been shown in psychological research that if people believe there is a solution to a problem, they are much more likely to find it. With millions of people devoted to finding an alternative solution rather than seeking redress through the electoral and legal system (though not by illegal means), I believe it is far more likely that we will have a better future.

I believe there is a solution. I don't know what it is in its entirety but i have some ideas of where it might start. And all your objections and questions, cb, have further inspired me to write them down which I will endeavour to have for your reading pleasure before too long.

That sounds good, James. I

That sounds good, James. I look forward to reading them. Will be a little busy from here on, but will try to drop back to check.

Ron Paul endorsed by CIA agent

The CIA's Michael Scheuer and Ron Paul

via Aangirfan RON PAUL BACKED BY CIA 'DISINFORMATION AGENT'?

James, you said: "The other

James, you said:
"The other issue that needs to be considered in conjunction with all this is that the money supply needs to be issued by the government, something that Ron Paul does not emphasize. In fact, he is mute about it, to the best of my knowledge. This is a glaring omission."

I would say that you have been missing and ignoring the fact that Ron Paul wants to end the FED, and hence the omission on this point is not Ron Paul's, but yours.

There is a practical and meaning equivalence between abolishing the FED and returning the function of issuing the nation's money supply to the people and their government. You are not suggesting, I should assume, that Ron Paul would delegate this task, instead, to the IMF.

James, you also said:
"If a government issued the currency at no interest (or largely at no interest), then in conjunction with a correctly regulated money supply, there would be no inflation or deflation. [cb: AGREE]

There would be no need for anyone to exchange their currency for gold because the currency's value would be stable and the goods would be available to exchange it for. The two reasons for having gold instead of currency would no longer exist." [cb: DISAGREE]

There are a multiltude of considerations that speak in favour of sound money through a commodity based backing, such as gold and silver. I will list here two of them:

1. People a fallible and corruptible, and powerful people especially so. Hence, there is always a risk that political representatives and other people regulating the money supply will be captured by special interests, whether they work for a private corporation, or the government.

2. Wars are a reality of life, and governments and their monetary systems can be abolished and overthrown, in which case the purchasing power of people's savings could evaporate in a flash.

Therefore, people must be given easy access to insuring themselves against such risks, and one of the best ways would be to allow them to exchange their currency and store their savings in a commodity that has value, quite independently of government honesty or stability.

James, and finally about your point of gold backing of the currency not providing the necessary flexibility to match the money supply to production with the changing circumstances that obtain over time. I agree that this is a consideration, and I have not thought it through to the degree that I would like to but intend to do, but it prima facie it seems to me that having a floating exchange rate for people to surrender and claim gold and silver in exchange for currency (digital or paper), would provide the necessary flexibility.

Indeed, it seems to me that this would be a superior way to match M with P, and namely through a market mechanism that would be harder to manipulate, and would probably result in less severe distortions than would be likely to result if the matching task were left in the hands of a select few (fallible and corruptible) people.

omissions

Ron Paul omits to talk about what he would replace the Fed with. That is a factual omission. Paul's omission, not mine. Given that there are huge benefits to the government and hence the taxpayer from having the govt issue the nation's currency, not to mention these benefits is very noteworthy, indeed.

One has to be suspicious and ask "why not?" The first possibility that comes to mind is that he has other plans. he has talked favourably about the "Amero" which would cover Mexico, the US and Canada. Who's going to issue that?

Regarding why people would need gold backed currency - people are indeed corruptible and i don't see how adding an entirely unnecessary variable into the mix is going to help combat corruption. Especially a commodity as synonymous with greed as gold is.

Money is a unit of exchange to facilitate trading between commodities. It is not a commodity in itself. It is an abstract notion just as any measuring system is.

To link it to gold which is clearly a commodity, is to distort the thinking around this relationship and have people thinking of money as a commodity. Then the manipulation and sleights of hand start, including having a government routinely make such idiotic statements as "we don't have enough money" to facilitate the exchange of goods already made and those that there are resources to make. It is as sensible as an architect saying "the building can't go ahead because i have run out of feet and inches".

If people want to preserve their purchasing power by holding gold, then there is nothing preventing them from doing so now or in the future under a fiat currency. They can buy it on the open market right now with their fiat currency that is backed by all the things it can buy - the production of the nation.

If war was to overthrow a nation with a gold backed currency, i wouldn't like your chances of being able to continue to exchange your money for gold under the new regime. If you wanted to exchange it before hand then you could buy gold on the open market, as i have said.

Coming back to your agreement that gold backed currency would not be inherently flexible and of your postulation of a floating exchange rate for gold (and silver) to possibly create this lack of flexibility, what do you think the ramifications of a variable value for gold (on which the money supply is calculated) would have on the money supply? Would P=MV still apply or would it become MM(Market Manipulation)=MV ?

Market mechanisms are extraordinarily easy to manipulate by people with massive wealth such as bankers. And they do so routinely through short selling and all manner of pump and dump schemes.

A fiat currency whose level was transparently measured by the government according to the productive capacity of the nation would be the least corruptible system that i can think of. It quickly becomes apparent to everybody when this mismatch occurs and there would be no credible excuses for not correcting it. The govt would be held accountable.

why is rp so coy about important details?

There is a practical and meaning equivalence between abolishing the FED and returning the function of issuing the nation's money supply to the people and their government. You are not suggesting, I should assume, that Ron Paul would delegate this task, instead, to the IMF.

but what is rp's position on this most important matter? who will get to issue the nation's money supply?

and in your earlier comment:

One of your assumptions is that if Ron Paul introduced gold backing for the currency, this would be done at a price and ratio where M would be less than P (M < P), and thus resulting in an economic crunch. But Ron Paul, if elected, could just as easily introduce that gold backing at a price where M = P, and thus not cause an economic crunch. And if he introduced that gold backing at a higher gold price, so as to make M higher than P (M>P), then he would cause inflation.

lots of IFs in there cb. seems to me that rp could go on the record with these critical positions, but he doesn't.

people who like rp will be inclined to fill in the blanks with a story they like. this is a very common way that people are manipulated. important information is omitted and people color in what *they* would do, what *they* want. only later do they find out they were wrong. and there is nothing more infuriating than when someone screws you and then says, hey i never told you i was going to buy you a fucking pony. and you realize they sure didn't say that. you just assumed you were getting a pony because he know how much it meant to you, and there was so much sweet talk...

in rp's case, he has a very likeable personality, he is very non-threatening with his high-pitched voice and his facial features. perhaps people are trusting him on very important matters and thinking they are getting a pony?

James, I agree that there is

James, I agree that there is much that hasn't been clarified around this issue, and I guess the focus of the campaign is not exactly the question of whether or not the currency should be backed with gold, and at what price, etc. All I can say is that the man is said to have a 100% constitutional voting record, so one should be well justified assuming that if elected to the presidency, he will be following the country's laws and constitution, which is a far cry from what you could say of any of the other candidates.

James, you also said:
"To link it (the currency) to gold which is clearly a commodity, is to distort the thinking around this relationship and have people thinking of money as a commodity. Then the manipulation and sleights of hand start, including having a government routinely make such idiotic statements as "we don't have enough money" to facilitate the exchange of goods already made and those that there are resources to make. It is as sensible as an architect saying "the building can't go ahead because i have run out of feet and inches". "

Fair go, Mate! Haven't the bastards been doing and saying all of those things with an unbacked currency?! Presenting these problems as if they were particularly applicable to a gold backed currency is quite a stretch. Don't you think?

Beyond that, it is true that people can keep their savings in the metals, even as things stand at the present. However, by treating gold and silver as no more than commodities, instead of treating them as money, the bastards are collecting taxes on the purchase and sale of them, plus charge the savers capital gains, and so on and so forth.

If the state abolished all these taxes, and treated the monetary metals as money, then I personally would not care much if the currency was backed by gold or not. I would always choose to be my own central banker, and would keep my reserves off-grid, as it were, out of the grubby hands of the financial hyenas. I just would not trust anyone looking out for, and preserving the purchasing power of, my savings.

Right now, even though the

Right now, even though the govt says it has no money to carry out infrastructure works, for instance, they really have no legitimate excuse for not doing it. But once money is officially treated as a commodity, as it would be with 'gold backing', then the politicians and bankers can point to the finite gold resources on hand and say they cannot legally increase the money supply to its needed level without breaking the law and without all sorts of dire consequences for the economy. You can imagine the blather.

Then to increase the money supply, it becomes necessary to take the nation off the 'gold standard' which i'm sure you'll agree would be a lot harder thing to do than simply voting for a larger deficit budget. The end result will be ever shrinking economy (as bank interest soaks up more and more of the existing money supply) and an economy that is immeasurably harder legally, politically and bureaucratically, to turn around.

Thank You

this is crucial information and should be widely dispensed. Thank you Mr. James.

you're very welcome,

you're very welcome, questioning smiling

the reality of gold being finite

jjane asked the following questions in a comment elsewhere-

Thank you for the explanation of the monetary system. I just have a question and that is what does the effect of the gold or metal being 'real' have on the formula, and that it is finite?

I'll tackle the second one first. What effect does gold being finite have on the formula? I take it that the formula referred to is P=MV. The effect is that a finite amount of gold will put an upper limit on the amount of money (M) that can be created to match the productive output of people (P). If that upper limit on money creation is higher than the productive capacity of a nation, then there is no real problem. But usually this is not the case. Usually, it puts a lower limit on money than is needed to cover the productive capacity. (And that is precisely the point from the bankers perspective.)

So the effect is to cramp the economy which means reduced production and subsequent unemployment even though there are needs in the community and the labour and resources available to fill them. Crazy stuff. One way out of this is to increase the nominal value of the gold i.e. to be able to print more money for every ounce of gold there happens to be in the banks' vaults.

But there's something really whacko going on here too. The bankers don't dig the gold up themselves. That might mean them doing something marginally useful for a change. No, they buy it with their money. So they have already issued the face value of the gold to the miners in their money. What are they going to do now? Sit on this gold and not lend money against it because they have already issued money to the value of the gold? I don't think so.

No, they will lend (create) more money against this stash of gold they have. So immediately there is more money out there than there is gold to redeem it with. And if these bankers are true to their goldsmithing ancestors, they will create money multiple times the value of the gold. This then is called Fractional Reserve Banking. Which means that only a small fraction of the money on issue is backed by gold which is a whole different deal to having “solid” or “sound money” as advertised. So is it going to be “first in, first served” when there is a crisis of confidence in the money? I don't think so, either. The bankers will get their very own bought and paid for government to pass a law prohibiting money being redeemed with gold which was supposedly the whole point of the exercise. Probably, though, they will have this law passed in advance.

If the bankers ever get to bring in this nutty system, it will almost certainly become illegal to hold gold as a private citizen just like it was in the US in the 1930's. The government made it illegal and people had to sell their gold to the government at $17 an ounce (from memory). The government then turned around and increased the value to $35 after basically confiscating the gold from the citizens. So how much good was the gold backing if the people couldn't exchange their money for it because they weren't allowed to own the gold that constituted the backing! Shades of Catch-22.

The gold backing was for the benefit of the international bankers and their settlements in the exchanges of their own international currencies. Presumably they either didn't trust each other or each other's currencies (quite understandable!). So try selling that idea to the public!

The other advantage to the bankers is that they have a seemingly feasible excuse for not issuing enough money (or restricting the government from borrowing enough money) to fully employ the nation. They have much more power that way. Desperate people do what they are told . . . . mostly.

It's all smoke and mirrors. If the mechanics of this gold backed nonsense was ever explained in detail, how it really works, the bankers (and people like Ron Paul who advocate this fraudulent system) would be chased out of town tomorrow . . . . or worse.

Next up, the reality of gold being real smiling

The Reality of Gold Being Real.

Most people (cocaine addicts aside), upon a little thought, would realise that the $100 bill they have in their hands is of little use in itself. You can't eat it; you would need an awful lot of them to give you any sort of shelter and it wouldn't make a decent fire. So it's value is about it's appeal to another person and this appeal is because they know it will have appeal to yet another person. That's the “carrot” part and it's a bit tenuous for the average person psychologically, I'm sure you'll agree. What ensures its use is the “stick” part.

We live in a world of government imposed violence. This government levies taxes on us all and will only accept the “legal tender” currency as payment. If you don't tender this legal currency in offer of payment, they will confiscate your goods and/or throw you in jail. That is some incentive, I'm sure you'll also agree.

So the goods traded in exchange for legal tender give it its value but the government through taxes enforces its use and thus ensures it cannot be entirely replaced with another currency. The government becomes the “acceptor of last resort” and so ensures value for it. So you can see the banks are dependent on having a government and one that levies taxes to make their money legal and indispensable.

People may instead readily accept a currency if they fully realised that it is themselves that give it it's value. But then they would ask, why do bankers get the benefit of issuing it and not themselves? So educating people to the true backing that lies behind any currency won't do. They have to invent a plausible alternative. Enter gold back currencies.

There are historical precedents to appeal to as well. Gold coins were a traditional medium of exchange and they worked because taxes were often collected in kind such as a proportion of crops or other produce. Also governments were not as all pervasive and intrusive as they are now. Individuals traded across borders and as all trade was barter of one form or another to start with, it was necessary for the medium of exchange to appear to have value in itself and be convenient. Gold coins could fit in your pocket and did not rust or decay. Gold was sought after for jewellery as well. On top of all that, it was rare and thus collectable. And it could be seen as form of barter in itself.

This rarity was a problem, of course, as a money supply as I mentioned in regard to the medieval Spanish economy. But a lot of trade was still in the form of barter. Goods of value were exchanged for other goods of value and this included the medium of exchange itself. It was understandable because it was tangible.

Modern paper money is much less tangible and digital money is not tangible at all. Money is actually an abstract concept and evolution has not equipped us to understand, appreciate or manage it in a 'natural' way. So if you are not a naturally good money manager (like me!), you now have a reason to be not so hard on yourself.

Bankers, and goldsmiths before them, deal in credit all day everyday and they end up thinking differently from the bulk of human beings when viewing society. So knowing we think in concrete terms most of the time, they issued their paper money (bank notes) with the promise to redeem them with gold. Once we got used to paper money that we could still hold in our hands, we were moved onto digital money but all the while money is 'sold' to us as if it is real; as if it is a commodity in itself which, of course, it is not. Have you ever wondered why finance companies refer to their loans as 'products'?

Money isn't real just like feet and inches and kilograms aren't real but it is extremely useful and its unreality is its great quality because it can be created in exactly the quantities needed to facilitate full employment and the full potential of our societies. But the banks have nothing to gain by educating people to this 'unreality' of money because then we would ask, “why do they have a monopoly on its creation and on who gets access to it? and why do they charge us interest on it”?

So they talk about it as if it were a real physical commodity and finite as well to hide its true (unreal) nature from us. So talking about a 'gold standard' even if they do not or cannot bring it to fruition, benefits them because they are continuing to push the notion that money is real in the sense of a finite and tangible commodity. And that we need anything to back it other than our own productivity.

I hope I haven't further confused matters for anyone with this answer smiling Please shout out if I have.

James, thank you for all the

James, thank you for all the time, effort and brain work herein. I get it in lucid moments, of which i have a few, that the only way to get out from under the tentacles of the money system is to put it back into the hands of the people that create it in the first place, We, the Sheeple. Before we get to the interest even, we have to have the power to keep the wealth we create. It's not a commodity in the sense of gold - something that can be manipulated and stolen if we have it in our power. Or we are slaves. (which we are) I'd even go so far as to say we're despised. Tough noogies. We do need to keep this out in the open, in the bright light of day, no matter what the course brings. Knowing makes us strong. It's true many will stamp their feet, and being a demoralized nation world no matter what proof you put in front of them will continue to disbelieve their own ears eyes and minds. Tough noogies, again.
As long as we live in a a culture that believes in lack, which is a big bunch of baloney - they will keep trying to convince us that we are the lucky ones to live with so much crapola, that we should be thankful we're not those children in Africa or Asia....that for many will be the end of their curiosity. Pity that. There's enough for everyone. Isn't it that those that have so much are so fearful? that rests on our side. Truth is so powerful. I'm so proud to read your work that no matter how many may stamp their feet in protest. But even Einstein said the thing that most confused him was compound interest. Because it's criminal usuary.
May the bankers this year find that their wealth is an illusion and they lived their lives in a fool's paradise. And reap the results, the scumbags.

Thank you very much, Marlene.

Thank you very much, Marlene. I'm glad you are understanding it. The sad part is that people who think they have it good now don't realise how much better off they'd be in a world without usury and capital available for any worthwhile project.

this link is broken?

I was looking at this site you linked the other day;
http://douglassocialcredit.com
just tried to check it again and now it's off line sad

yeah, the site is still down.

yeah, the site is still down. I'll keep checking.

Mack E. Avelli on gold

James I once posed a question on another blog about the necessity of owning gold
and received the following response:

"while gold by itself will not gain you good soldiers, good soldiers may readily get you gold. "

From Machiavelli in Titus Livius Chapter 10

Skills often trump commodities.

Move forward a few hundred years:

"Own nothing! Possess nothing! Buddha and Christ taught us this, and the Stoics and the Cynics. Greedy though we are, why can't we seem to grasp that simple teaching? Can't we understand that with property we destroy our soul? Own only what you can always carry with you: know languages, know countries, know people. Let your memory be your travel bag. Use your memory! Use your memory! It is those bitter seeds alone which might sprout and grow someday." A. Solzhenitsyn

Much appreciate all your writing efforts and the work of the folks behind this site.

Here's to a better New Year !!!!

Dave

Dave!!! I'm glad you dropped

Dave!!! I'm glad you dropped in. I was thinking about you when i was writing the Christmas Message. I remember you asked earlier in the year if this economic depression had a benefit in its hand for us and i didn't answer it like i wanted to. So the 'message' was the answer that i wanted.

Gold is a euphemism for power mostly, i think. If it was just about gold we could give it all to the Mr Avellis in the world and tell them to piss off and eat it and leave the rest of us alone. But they want power and push materialism down our throats to get it and we haven't the sense to tell them to push their materialism up their .....

I remember splitting with my first wife many years ago and only taking what would fit in my pack on my old Ducati and with $400 in my pocket hitting the road. With just what i could carry (except for the bike!) as Solzhenitsyn advocates, i really did feel free.

Lies, lies, damnable lies!

The smoke and mirrors which is the so called electoral process here in the redwhiteandblue generates a mythology of choice through the creation of myths and legends. Those caught up in the "debates" over which candidate will best serve the populace are on a dead end street. The entire government is only a facade, it's sole purpose is to tax and rob from the public, policy is decided upon long before any solon submits a bill or makes a speech.
That such shallow characters as Ron Paul, Romney, or any other, regardless of party now are put forth as potential "statesmen" is a bitter joke, showing the nation as a pool with very few big fish.
The very few that dare address real issues- the environment, industrial policy, medical care , are driven to the far edge of the picture, usually with smug and derisive comments by the "real" politicians and their sychophants
A storm is coming, and that storm will force real decisions upon us all.

Dave's comment

I tingle with Dave's Solzhenitsyn quote; we need to redefine WEALTH. That being, what we carry within us our knowledge and memories. I own property for the first time in my life and I can say it owns me. Like you, I've packed a backpack and taken off light as a bird and there is no feeling like it. It makes me weep! I think within all of us is that feeling to be free of the crapola and gazillion webs that drag on us. How can we know who we're supposed to be when we have the mintua of all this weighing on us - taking our time and mind space up?! I made a beautiful place, a sanctuary really, and I am so ready to hand it over to the next being. To really know people and places - that's the gold.

flaw in the article

while you and alexei are quite right about gold alone being too narrow and manipulable by major powers/banks/institution x etc ;( i.E. the 188o's when the rigid gold standard disallowed "natural" deflation or wealth value diversifying into other barter ready goods). You oversimplify Ron Paul and the austrians who as I've known the emeritus economist and physician to be no fool. Indeed most austrians today advocate a basket currency or a broad spectrum gdp backing which makes centralization and mono-accumulation into too few hands difficult to impossible. The constitution allows gold or SILVER as legal currencies at a fixed exchange rate. Historically the free silver movement which debtors who were mostly farmers and ranchers advocated was championed by William Jennings Brian in his famous cross of gold speech which catapulted him to 3 nominations for president around 1890 to 1910(he lost all 3) silver would disallow hyper deflation in a hot economy because it's useful as storage of wealth and industrially so it has a natural reverse feedback mechanism to release more or less to meet market demand. Many people may simplify ron paul's position as monetary policy can seem obtuse to most. I also think your LETS advocacy is similar to colonial specie and has some merit albeit it is problematic as it has no fail safes like most fiat currencies even if not banker owned.
check the link to see a picture of ron publicly holding silver in ben bernanke's face.

http://silverunderground.com/wp-content/uploads/2012/03/ron-paul.png

Thanks for your opinion,

Thanks for your opinion, Andrew. Good luck with those studies.

McJ's picture

:)

smiling

P=MV

This was an extremely thoughtful and well written article and I deeply appreciated reading it. There is one fundamental premise that you based part of your argument against Austrian Economics / Ron Paul that is not entirely true. Ron Paul and the Austrian School have never advocated for a return to a gold standard as that existed in the past. The comment you made in your article about the Australian economy during the last depression was totally valid and demonstrates a major flaw in the old gold standard. Ron Paul has advocated multiple, competing currencies. The market would assign value to each of them. Social credit notes could and should be a part of this. To legalize competing currencies:

1. End the fiat laws that make federal reserve notes legal tender.

The federal reserve would still exist but would lose its monopoly. Federal reserve notes, silver certificates, gold certificates, labor certificates, agricultural production bonds, etc. would all be circulating and each buyer and seller could choose which currencies to accept and use. The value of each currency would float against the others based on market demand. With digital technology in the mix, this represents an advanced form of barter.

The main problem lies in the collection of taxes. As it stands now, the government only accept the fiat currency in payment of taxes. If it only allows tax payments in one currency, that acts as an artificial subsidy to that currency, giving it an unnatural market advantage (people will demand it to use to pay their taxes). The government would have to accept payment according to the fair value of any given market currency.

The ultimate idea of the Austrians, as I understand their thinking, is to allow the free market to manage money just the same as any other product or service. Competition is key. If it were as simple as just going back to the old gold standard, all the negative things that empowered nefarious and unscupulous bankers in the past would be back in a flash. Needless to say, giving them a monopoly through the FED hasn't helped society either. It has merely stolen all the gains that would have been given to us by technology. Production methods are vastly superior and yet prices remain at their inflation adjusted levels of 100 years ago in many cases.

Grand Theft

Rob, I'm glad you enjoyed reading my article, but I don't think you understood it. I am against the Austrian School of economics and Ron Paul for two main reasons which I explained in my article.
Firstly, advocating a commodity backed currency, other than the GDP backing of the nation, is to hamstring any economy and make it captive to those who would manipulate the commodity in question regardless of whether the gold backing is done via any so called 'old' system or any other scam they may think up. Whatever the details of the issuing of any gold backed currency are is irrelevant. Commodity backing of any sort (gold or otherwise) only adds to the problem of having the currency (fiat or otherwise) being issued by a private corporation whose interest is counter to the rest of the population. Neither Ron Paul nor the Austrian School come out in favour of a govt issued currency. Therefore they represent the interests of the bankers and not the people. To quote from my article-

”Regarding “hard currencies” (commodity backed - Ed): having productive resources such as physical labour, intellectual skills, raw materials, machinery and productive land all sitting around idle because the nation does not own enough gold to allow it to print enough money to facilitate the use of all these idle resources while people are without housing and food is just plain nuts! Worse, it is criminal.”

This is why 'gold backed' and any other 'backed' currency is wrong because it can restrict the issuing of money to the level of resources available in the economy and therefore cause needless unemployment and hardship. The same can be done by a privately issued fiat currency too, of course. But why add to the problem for no gain for the public?

Secondly, Ron Paul and the Austrian School advocate a laissez-faire type of economy which again favours the bankers at the expense of the people because, by its nature as explained in my article above, laissez-faire economics leads to chronic recession if not depression. Think Victorian/Dickensian England.

That Ron Paul advocates multiple currencies being issued is nothing short of lunacy. The problem is a privately issued national currency. So Ron Paul's answer is to have multiple privately owned national currencies!!

A national currency is a part of the necessary infrastructure of a nation. Because the level of money issued directly controls the economic welfare of everybody, it must be governed by a body with no private economic interests at stake. Otherwise we are all captive to this money power – as indeed we are.

Increasing the number of currencies backed by various commodities and encouraging trading amongst them will only further distort the national economy and make windfall profits for the speculators and issuers of these currencies. And need I say these profits will come to them at our expense.

In short, the currency of a nation belongs to the people because they supply the value and backing for it regardless what the nominal backing may be. The real value and backing is always the total of goods that can be purchased (GDP) by the currency. This currency, then, should only be issued by the govt in the peoples name and for their benefit as specified in your Constitution. Ron Paul is all for the Constitution, so let him be for this.

For a private corporation to issue a private currency, when in fact it is given it's value by the peoples productivity, is to steal the seigniorage from the nation. The seigniorage being the margin between the cost of a currency to produce it and its face value when spent or lent. This theft is absolutely massive and goes on year after year and Ron Paul has not said one word against this to my knowledge. Nor have the Austrian School of economics.

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